Forbes India – Finance, VC: A Founder And A Funder Are Spearheading The Venture Capital Firm’s Bold Pre-seed Bets In India. Is Catching Them Too Young The New Name Of The Game?

(From left) Nitin Sharma, Partner at Antler India and Global Blockchain Lead at Antler and Rajiv Srivatsa, Partner at Antler India

Cand bet blindfolded? “You need some kind of data,” says Nitin Sharma, a veteran venture capitalist [VC]. The reason is simple. Information of any kind – about the product, the user, the size and the team – helps a VC to assess the risk and potential of an investment in all phases of the financing, starting with the seed round. The visual sense therefore becomes the main tool when placing bets.

But what if all visual cues are blocked? No offer, no consumer, no team and no operations. Can bets still be placed? “Yes,” says Sharma, who worked in the US at venture capital firm NEA, was founding team leader at Lightbox Ventures in India, and played angel during his solo investment journey when he founded FirstPrinciples VC.

If there is no data for diligence, then it is more about psychology than economics. “Pre-seed funding is about the idea, the belief and the founder,” said Sharma, Partner at Antler India. “Everything else comes later.” Headquartered in Singapore, Antler is one of the largest and fastest growing early-stage investment platforms in the world, having launched operations in India last year. Pre-seed, Sharma explains, in a startup’s evolutionary journey is a stage where the founder has only one concept. “There is no investment deck,” he says, decoding the mindset of a pre-seed stage investor.

But what does a VC-turned-founder look like pre-seed rounds? It is necessary? Rajiv Srivatsa believes there is an urgent need. “I had never written a check in my life,” laughs Srivatsa, who co-founded online furniture startup Urban Ladder in 2012 and became a VC when he joined Antler India as a partner. “I experienced a lot of ups and downs on my journey,” he says.

For a founder, each growth phase brings its own challenges, pre-seed takes the cake. While 0-to-1 and 1-to-10 growth is excruciatingly tough in the life of a startup, perhaps the hardest part is the pre-zero phase – the ideation phase. All it takes is a bit of time to validate ideas, hire the first people and experiment. “What you need is the empathy of a founder,” says Srivatsa, adding that most of the people on the Antler India team were founders.

A founder and a funder are leading Antler’s bold pre-seed bets in India, playing the early-stage investing game in a differentiated way. “When you’re making bets like that, you’re not in the deal flow business because there are no deals,” Sharma says. Antler, he admits, dabbles in business startups.

In just over a year Antler has backed 16 ventures, has a ticket size of just under Rs2 crore and the plan is to stay calm rather than hit the gas pedal. “What we do is probably more like farming,” says Sharma. Antler, he explains, helps people plant seeds and ideas in new spaces that don’t exist in India. “We come very early, but remain disciplined and clear in our approach,” he says.

Take Bookee for example. The software-as-a-service (SaaS) startup focused on the US fitness industry builds best-in-class software that enables over three lakh fitness entrepreneurs around the world to scale their businesses. Then there’s Codedamn, an interactive coding platform that makes industry-level coding skills accessible and provides solutions for interactive learning at scale. Founded by 22-year-old Mehul Mohan, Codedamn claims to have thousands of registered users and paying users from over 60 countries. Codedamn Creator was recently released, a tool that allows teachers and developers to start their own interactive programming courses anywhere.

Another interesting bet is Humit, a social music platform. Founded by BITS Pilani graduates Rohit Ganapathy, Prithvi Sankar and Ishaan Negi, Humit aims to reinvent music sharing and discovery by leveraging community and social taste education. “It reimagines the way people discover, share and express their taste in music,” says Sharma.

Antler not only looks for distinctive ideas, but also catches potential founders early on. There’s the Antler India Fellowship — which provides college students with a $20,000 equity-free stipend — to discover entrepreneurial talent on college campuses. Eight ideas have been funded so far. Srivatsa explains the strategy of chasing across campus. “Although not new, university founders are a stronger trend that you’re noticing [in] this decade,” says Srivatsa.

One such example is Muskaan Sancheti and Raghav Jhawar. The 22-year-old graduate of New Delhi’s Shri Ram College of Commerce co-founded The State Plate in August 2020. A curated platform for India’s regional foods, The State Plate seeks to create a solution to the pan-Indian accessibility of regional cuisine. From gobindobhog rice from West Bengal and murukkus from southern India to bhoot jolokia pickle from Nagaland and kachoris loaded with dried fruits from Jamnagar, the startup offers a diverse range of kitchen essentials and iconic delicacies.

Srivatsa explains why India is experiencing a tsunami of young founders. People are realizing that younger means more risk-taking, more freedom and fewer dependencies. “They are much more confident than they were my age. I started when I was 33,” he says. “Today there’s just a lot more ‘let’s dream big early.'”

Youngsters and first-timers might be the flavor of the season, but Antler’s portfolio also has its fair share of second-timers. Srivatsa lists two major benefits of supporting seasoned entrepreneurs in their second term. First, the rich learning from her maiden venture lets her understand what and how to do things right next time. Second, they also know what not to do.

Take the technology-enabled leadership development platform Peak Performer, for example. It’s a full-stack solution that companies can use to educate managers at all levels. Co-Founders Aishwarya Goel and Nilesh Agarwal build the platform by integrating 1:1 individual coaching, continuous learning, assessment and behavioral development. Last October, the duo launched a new app that enables a smarter, more automated, and continuous coaching journey, along with a host of new features.

Another example is Mumbai-based Bold Finance, co-founded by ex-McKinsey and ex-Flipkart grads Nikhil Jain and Durgesh Suthar, respectively. As a financial services platform aiming to disrupt the disorganized gold lending market in Bharat, Bold Finance leverages existing jewelry stores for customer acquisition, gold appraisal and loan disbursement, while also working with banks to underwrite loans and facilitate gold collateral storage. While Jain had deep expertise in the jewelry and gold lending industries, as well as experience leading digital banking projects for leading national banks at McKinsey, Suthar led the engineering team at xto10x, developing SaaS products used by 200+ startups and built scalable technologies on systems at Flipkart.

It could be argued that bold bets also come with a warning: big misses. For Antler, which takes an unconventional approach by eschewing “copy-and-paste” models and encouraging innovative ideas, the downside could be huge. Finally, some global data and studies suggest that the highest percentage of failures occur at the pre-seed stage.

Sharma is aware of the downside. “The easiest part of investing is writing the check,” he says. “After that, the hard part begins.” The average Indian VC, he estimates, is still not a risk taker. If you only fund derivatives, you’re not taking on enough risk to get big returns. Though Antler may be one of the first to institutionalize pre-seed funding, other global biggies like Accel have also joined the fray.

However, Sharma doesn’t mind that the room gets crowded. He knows the game isn’t about deal speed. One of the most difficult things in the pre-seed phase and when looking for low-profile founders is to have a lot of patience. “Sometimes it’s frustrating,” he says. Reason: The best storytellers win, and often great founders aren’t just great storytellers. Antler, he emphasizes, tries to strike a balance between finding companies with potential, hunting down ideas that are sound from the ground up, and finding founders with the right personality traits and storytelling skills. “We are looking for rough diamonds,” he signs.

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